Early on in the COVID-19 pandemic, many businesses began to scrutinize force majeure clauses in their commercial contracts and leases. Such contractual clauses, when engaged, either permanently or temporarily relieve the affected partyies from the performance of some or all contractual obligations, and from the consequences of a failure to perform those obligations, where performance is rendered effectively impossible by unforeseen, extraordinary events or circumstances beyond the control of the affected parties. The significant commercial impact brought on by the COVID-19 pandemic and resultant government shutdowns and restrictions appeared ripe to trigger these clauses and spawn significant litigation.
In the United States, corporate directors owe, as a subset of their duty of loyalty, a duty to monitor and oversee the operations of the company, referred to as the duty of oversight in this blog. This duty is known as the Caremark duty, named after the 1996 case establishing its parameters.